If you're doing a debit spread, the amount you pay is equal to the maximum loss of the spread. For credit spread is the opposite (imagine you're the person selling the spread to the buyer of the debit spread), then you get paid cash up front equal to the maximum profit of the spread. The number of debit spreads you can buy is determined by how much available cash you have, whereas in the case of credit spreads, it's determined by the margin of the spread which is calculated to be the maximum loss amount of the spread plus credit received.
Debit amount - From what i gather, its determined by market makers. There is no calculation one can use to estimate the debit amount? Hence, the option trader is stuck with whatever price the market makers decides on? So lets say the pair of Bull call spread expire in 60 days time, even if both strikes have been hit, nothng will happen and the trade will still be in force? Then, when will i realise my profit made? Is it possible to take profit before the options expire? What happens when the sell strike price is hit but before the options expire, it heads south, will the trader be able to realise his profit?
There are usually more than one market makers who compete for business, especially on popular/liquid stocks, so the price is determined by market forces (supply and demand), and can be calculated mathematically using Black-Scholes formula. That formula is based on historical volatility and implied volatility (current supply & demand), so generally you can obtain “fair” price according to the market. Market makers also compete with regular traders who can buy/sell options at better prices, so if market makers don’t do a good job then they could be replaced by some traders who could become market makers if they could trade a lot. But there are 1 million options and simply not enough orders at any time for regular traders to trade options with other traders, so market makers fill this role by always offering to buy and sell options, with some markup for themselves. And options are traded less often than shares, so the bid/ask spreads are wider, and everyone loses a little “slippage” when trading them, especially on less liquid stocks that aren’t super popular. Longer expiration dates can also have larger slippage because less people trade them. But many people trade options and spreads and understand there is some slippage. I usually place orders to buy or sell at the mid-price (between bid and ask), or simply the price I want, and sometimes wait hours or even days to get my order filled. Sometimes I may need to adjust my price by a few cents. Exiting can be more difficult but if you make profit you can accommodate some slippage again. Or trade options on very liquid stocks like SPY or AAPL. When your options expire then you will realize full mathematical profit, simply because options will get converted to shares, so you’ll buy them at $20 and sell at $25, and therefore receive $5, while previously paying ~$2.50 for your spread. If both strikes have been crossed before expiration then your spread may be worth, for example $4-$4.80, also depending on how much time is left to expiration. You could use Black Scholes formula to calculate theoretical price of any option or spread, but the formula is complex and one of parameters/variables is implied volatility which depends on supply & demand, so even theoretical prices can fluctuate. This is less visible for spreads because they have specific range and fluctuate much less than single options. You may just need to do some test trades and get a feel for this. But your experience may also be different with each stock and each trade even on the same stock - because it is different for me as well. You’ll have more consistent experience with popular stocks.
Oh, and yes, the trade will be in force at all times until expiration, even if both strikes have been crossed before then. Because you can even buy spreads with both strikes already crossed, which is called ITM (in the money).